What's the potential impact of casino tax increases on wagering handle: estimates of the price elasticity of demand for casino gaming

Abstract

This study estimates the price elasticity of demand for casino gaming. A demand model is estimated with data from a panel of 50 casinos operating in Illinois, Indiana, Iowa, and Missouri between 1991 and 2005. The model isolates the impact of changes in the casino win percentage or price on the wagering handle, controlling for the impact of other operating, economic, and regulatory determinants of the wagering handle. The model estimates suggest that the wagering handle in the short run is inelastic to price changes, and that in the long run the wagering handle is unit elastic if not somewhat inelastic.